May/June 2009

Recession Solutions for the Lone Collection Manager

By Patrick Ingegno

Perhaps you've noticed that things have changed in the financial environment. Tried-and-true methods are no longer available or no longer bring the desired results. Procedures you've relied upon for years might no longer be the most efficient way to drive down bucket levels of delinquency. You, the collection manager, MUST have the answer, and you MUST have successfully deployed it yesterday because he (or she) who lingers is lost!

Departmental budgets are stretched, revenues down and delinquencies up, so finding the solution is not simple. Past methods that entailed "throwing money at the problem" might no longer be options. For example, consider the following:

• Hiring more or more experienced collectors

• Offering additional overtime hours to top producers

• Hiring more part-timers

• Increasing staff during peak shifts

• Increasing outsourcing

• Tweaking incentives to get more bang for the buck

These solutions might lead to positive incremental change in the bottom line, but they all cost money. You must, therefore, step outside your comfort zone to find the answer. After all, it is your job to find the answer, fund the solution, sell the idea to upper management, deploy the application, obtain staff buy-in and roll it all into a big ball of SUCCESS. Unfortunately, senior management is not sitting around behind closed doors saying, "Poor collection manager, he has a tough job … " No, they are counting on you to stand and deliver the goods. 

Recession? What Recession?
Collection always has been a tough job, and getting that job done is your lot in life. It's what makes you who you are. It's what makes other managers move to the side when you walk down the hall. You are the COLLECTION MANAGER! The lone sheriff in a Wild West town of slow payments, loan defaults, repossessions and foreclosures. Are you up to the job? I think so. Let's look at solutions.

First Solution: Automation
Traditional wisdom indicates it is wise to address delinquencies as early as possible in order to stem the tide of eventual charge-off/write-offs. But addressing delinquencies early, when volumes are highest, requires increased staffing, high-volume calling and therefore, high expense.
What the proactive collection manager needs to do is drive payments at lower delinquency without the expense of staffing. If this can be done, the expertise of live agents can be maximized on a small volume of high-delinquency accounts.
How do you drive payments without live calling? The following are relatively inexpensive methods:

• Automated email blasting of generic form reminders can effectively drive early delinquencies to call in or go to a company website to make payments.  
• Call blasting or automated phone messaging can be done internally or via outsourcing. Even if customers don't listen to the full messages, their caller IDs will list your phone number.
• Website messaging can be used on many existing company websites, wherein the collection manager can initiate messages to specific segments of the customer base. When customers sign on, messages inform them that payments are due or direct them to please contact the collection department.
• Professional mailing of dunning reminders is a collection industry staple that has remained an effective, though somewhat dated solution

Second Solution: Restructuring
When early delinquency solutions are employed, collection staff can be redeployed into the higher levels of delinquency. At a 60-day delinquency level, live agents can address the smaller volume of accounts in a more in-depth manner with the following methods:

• Live calling
• Dispute investigation and resolution
• Negotiation of payment plans
• Offering of company-approved programs
• Skip tracing

The results might surprise even the most experienced collection manager. As live agents are able to use their skills on a small volume of high delinquencies, the plus-60 day numbers will immediately reflect their efforts. In-depth work pays off. Further, the most experienced and assertive backend collectors can be deployed into a short-span window of about 10 days prior to charge-off or repossession. Their skill at persuasion will be maximized, as much of the "leg work" will have been completed by the plus 60-day team. Your concern about a tidal wave of early delinquency will dissipate as you find the automated solutions you initiated more effective than anticipated. Further early-delinquency solutions that can be employed are as follows:

• Establishment of an inbound calling team to handle spikes of inbound calls
• Periodic "collection blitz" drives in which the staff dives into the early delinquencies with live calling campaigns
• Special "Tax Time" or other seasonal emails, letters or automated messages

Although the financial environment has changed, the collection manager who is not afraid to be flexible will always find a way to get the job done.

Patrick Ingegno is Collection Manager at Condor Capital Corporation in Hauppauge, NY. Contact him at patricki@condorcap.com.